Medical Provider Reimbursement Case Moves to Michigan Supreme Court

By
Goodman Acker P.C.
|November 22, 2016

Can doctors, medical service providers, and hospitals file suits against
no-fault insurers seeking payment for services they have rendered to individuals
in car accidents? If they can, can these medical providers safeguard their
rights to reimbursement by sending written notices to no-fault insurers
regarding their intent to collect pay on their own?

The Michigan Supreme Court seems ready to answer these questions or to
hear arguments regarding these questions by granting leave to appeal in the case
Covenant Medical Center, Inc v State Farm Mutual Automobile Ins Co. During this case, the following two issues will be addressed:

Whether providers have a direct cause of action against no-fault insurers

Whether an individual injured in a car accident can discharge the claims
of providers that have notified the no-fault insurer of their intent to
pursue reimbursement

The Decision

During the case, Covenant Medical Center sent numerous bills to State Farm
for medical treatment the center provided to an injured person who was
insured by State Farm. After State farm received and responded to the
bills, State Farm entered an agreement with the injured person, agreeing
to pay $59,000.00 in exchange for being released from any liability “regarding
all past and present claims incurred through January 10, 2013” resulting
from the vehicle accident. After, State Farm failed to reimburse Covenant
Medical Center for the services, claiming the agreement relieved it of
any duty to pay bills. Covenant Medical Center then filed a lawsuit against
State Farm for payment, and the trial court ruled in favor of State Farm
and dismissed the case.

Upon appeal, Covenant Medical Center argued that that agreement with the
injured person did not relieve State Farm of paying the bills, claiming
Covenant Medical Center provided notice to State Farm by sending medical
bills, making it clear that Covenant Medical Center intended to pursue payment.

This time, the court agreed with Covenant Medical Center finding it safeguarded
its right to reimbursement within meaning of the No-Fault Act by sending
the medical bills to State Farm. Because State Farm received this notice,
the Court of Appeals said that State Farm could not discharge their obligation
to pay Covenant Medical Center by settling their claim with the injured
person. Additionally, the Court of Appeals rejected State Farm’s
argument that the “hold harmless” provision only allowed Covenant
Medical Center to seek pay from the injured person. The Court of Appeals
emphasized that Covenant Medical Center was not a party to the settlement
and release.

Soon, it will be determined whether the rights of medical providers will
be upheld by the Michigan Supreme Court. As of now,
Covenant Medical Center, Inc v State Farm Mutual Automobile Ins Co. continues to move through the appellate system.

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